[00:00:00]

Speaker: Aileen

Thank you everyone, for joining today’s episode of the “How Did They Do It? Real Estate” podcast. We are your hosts, Seyla and Aileen. And today’s guest, we have Isaac Schwadel.

Isaac is a full-time Commercial Insurance Broker at AllSure Insurance Brokerage where he helps clients decipher insurance requirements for commercial real estate and the construction industry.  So, we are very excited to having him on today, we have a lot to learn. So, welcome to the show, Isaac.

[00:00:24]

Speaker: Isaac

Okay, thank you. Thank you so much for having me. Hopefully, I can give over a little bit of what I know.

[00:00:30]

Speaker: Seyla

Absolutely. There’s gonna be a wealth of knowledge here. So, before we get started, can you tell our listeners a little more about your background, and what you do, and just how you got started in real estate?

[00:00:39]

Speaker: Isaac

Sure. Okay, so I got started in the Insurance part of real estate. I actually started with Insurance on the servicing end is sort of how I made my bones. You know, learn the ins and outs of policies that a lot is with Insurances.

Essentially, there’s the front end or the back end. The front end, being Brokers no actually meet the clients. And then there’s the people who go out to the market, figure out what exactly is needed for the particular risk. So, I started with that and then about two years ago, transitioned into sales. So, I have both the back end and I guess, front end knowledge when it comes to Insurance.

[00:01:17]

Speaker: Seyla

And so, Aileen mentioned that, we are very excited to have you on our show and to learn more about the Insurance side of things for the multifamily space.

So, as an operator, what are the key things to look for when hiring an Insurance Broker? And what are some of the questions we should be asking the Brokers to qualify them?

[00:01:37]

Speaker: Isaac

Okay. The first thing, as I guess it’s not unique to Insurance is; somebody that you can relate to and have an easy business relationship with. But that’s, I guess that’s stating the obvious.

Somebody you can trust and trust that has your best interest in mind, again that might be stating the obvious. And then, when it comes to specifically for Insurance is knowledge of that specific area. I don’t mean, like areas as in region but areas as in, type of asset or type of business.

Meaning, every United States, every single business, no matter what you do, you can be sued. So, everybody needs Insurance. Some different Brokers, specialize in different aspects. That our Brokers specialize in; manufacturing, specialized in tracking, transportation, real estate.

So, I would say is, when you’re choosing a Broker people have existing relationships, let’s say the person that they insure their home with, and they can be that person, can be an amazing Broker. But they don’t have the proper or necessary experience, in let’s talk about multifamily in the multifamily sector. There might, they might know a little bit about it. But like we all know; a little bit of knowledge can be dangerous. So, what you are really need is somebody who understands and is involved in asset or type of business that you’re involved with.

[00:02:53]

Speaker: Aileen

So what kind of questions should we be asking the Brokers to see if they have the knowledge and the expertise in that specific asset class?

[00:03:03]

Speaker: Isaac

So, just building on what I said before, if you’re working with somebody you know, and trust and have good relationship with. It’s as simple as just asking them, here’s what I have, is this something you have experience with?

If it’s, if he says no, but you want to give me you are to know, but I would like to try. That’s a business decision on the operator’s part. And then, you can ask more specifically this type, once they and once they and if they say yes, then you can start asking more specific details about the specific asset class, even that doesn’t usually make a difference.

But the region and different types of different types of, I guess, a thing that are going on, in other words, some operators are focus a lot on the value add. Value add in when you deal with value add you dealing with construction or sometimes heavy construction. You also want to ask the Broker if he’s dealt with large construction projects, which is another, I guess, niche within a niche when it comes to multifamily.

[00:03:58]

Speaker: Aileen

So do a lot of the Insurance Brokerages, service, all areas of the US, are they just in specific areas, specific markets?

[00:04:08]

Speaker: Isaac

It really is a case by case basis; it depends on licensing. It’s easy to get once you just to explain briefly the licensing process, there’s what’s called a resonant license, which means you get licensed in the state that you know, live and work at primarily, work.

And then you can produce or provide that license to other states. And based on that they’ll give you a license to operate in that state. It’s not difficult usually there to process. And yeah, then you’re open to do business across the continental US facilities.

[00:04:37]

Speaker: Seyla

So, as an operator, if we have deals under contract, and at what point should we engage an Insurance Broker?

[00:04:44]

Speaker: Isaac

I would say before you’re in contract, actually, there is, every deal has as best as I’m sure you know, every deal has the due diligence phase and from my experience that, you know when you’re given the Insurance costs. It’s always good to show that to an Insurance Broker, see if it makes sense to see if they can, if it seems too high, it seems too low, you know, just to sort of pick their brain based on these particular asset, location, whatever it is to see if that if those numbers make sense.

Oftentimes, the numbers are not a 100% accurate for whatever reason. So, I would also suggest trying to get a copy of the existing policy, meaning they say you look at the T-12, you look at the budget, and they say they’re paying XYZ for insurance, ask them for some documentation to back that up for a copy of the existing policy that says, that shows paying this much for property, this much for liability, if there’s excess liability, how much are you paying. It always puts you and the Broker in a better position to better understand what’s going on what’s going on. And so that’s in the due diligence phase.

Once you’re in contract, and meaning you’ve checked everything over with the, with your Broker, you have, you know, a sort of a clear as clear picture as you can get in the due diligence phase, then, when you’re in contract, you’re going to most, I don’t know what types of assets you deal with. But if you’re going to involve a lender, you secure the lender, all lenders have what’s called Insurance Requirements.

Once you have that, then you can, then you go back to the Broker, or if you want to try before that, but it’s best when you have all the information in hand, you go back to the Broker and said, these are, this is my lender, this is their Insurance requirements. And you know, if you can begin the quoting process, and just a small note about when the Insurance requirements from the lender, just how I’ve seen it been given, usually it’s given in two steps.

First of all, give the general requirements which says what types of Insurance you need, sort of the liability limits, if there’s excess liability, and then sometimes it’s included in that sometimes it’s not is the replacement cost, which is a result of the appraisal and the amount of rent to be covered. So, the more information you’re able to give over to your Broker, the better position it puts you in because the quote is more accurate, as you know what you’re going to eventually have to go.

[00:07:03]

Speaker: Seyla

So, you mentioned that the more information we have, the more accurate the quote, that’s going to be. So, what happened at a point where like we do in the underwriting a deal, and we don’t have a potential deal. What is a rule of thumb that you can recommend, the close enough percentage to allocate for Insurance?

[00:07:24]

Speaker: Isaac

That’s one of the questions. One of the questions I hate most. The unique thing, the unique thing, nothing personal. The unique thing about insurance is that every single property is underwriting is underwritten, individually. Meaning that I can you can call me up and say, Hey, I’m looking at something in I don’t know, you know, Jacksonville, Florida. And do you have, you ever done something there? I do, I did two other properties there. And those two other properties can be vastly different than even either on the surface, but then near it’s understandable, or the history of the particular property that you’re you know, you’re looking into is much different is whether crimes committed, whether claims files. So, it’s really, really difficult to give a rule of thumb, that’s why I mentioned before, if you get a copy of the existing policy from the seller, that always puts the Broker in a better position. And I mean,

I’m me and I operate you know; operate how I feel is in the best interest of my client. Which is I don’t like to just give numbers and then have to walk them back later.

I rather say that I don’t know at this point where I can give you a range but there’ll be a wide range and let’s get as much depth, let’s get information or as much information as we can. So, we’re not shooting in the dark you know are going at this point.

[00:08:45]

Speaker: Aileen

So how long does this process usually take to, from when you first have that conversation with the Broker until you actually get a provide all the due diligence to the Broker to be able to provide a quote for the Insurance?

[00:08:59]

Speaker: Isaac

It can be quick or sometimes it can drag on. It a lot depends again, like the properties are underwritten individually so we send it in the underwriter takes a look at it. They another thing I’ll say also, when it comes to timing is that when you have a set date, set closing date, then it’s a lot it’s a lot easier to push the client push the carriers and the underwriter along you know, we need it by this date. If it’s sort of something that’s up in the air, then they don’t feel the urge, you know, we can make up an approximate day.

But if we have you know, anything if you have a hard day that’s always good. But again, it’s hard to answer that question because if the underwriter comes back with questions, and then they have to research so there’s a lot that’s out of, excuse me, the Brokers control when it comes to timing and even if you’re the most efficient that have the best office, you know, back office and everything’s running smooth. You’re waiting for the underwriter to look there whatever doing whatever they doing their thing on the writing the particular risk particular property that can take time, some are quicker, some are slower. Some have I can speak about our Brokerage some of them were able to we have direct access to some carriers which allow us to rate it up online, which gives, you know, which is a little bit quicker. So, it really, again, I hate to give not clear answers, but it really depends, and there is no set answer.

[00:10:22]

Speaker: Seyla

That makes sense. What are the different types of Insurance policy available for the multifamily space? Will you be able to give us and our listeners, multifamily investing? Insurance 101?

[00:10:33]

Speaker: Isaac

Sure. So, with multifamily with any property, there’s two basic parts of insurances; property, and there’s liability.

We’ll start with property, property is coverage for the property in the in the current and, you know, if something happens, if there’s a loss. Loss of the fire is defined by an occurrence, a fire, a flood, hurricane, right, some, there’s some sort of cause that caused a part of the property to be damaged, then the property policy will kick in, and we’ll help you make you whole again, if the entire build is a total loss, the entire building burns down, you and your property and your policy, I’m sorry, is set up correctly, you will have the Insurance company will pay out for so you can rebuild the building. That’s property.

And then on smaller levels, obviously, also, there’s a small fire or small flood and you know, a portion of the building damage, your policy will cut will make you whole again, that’s the property portion.

Then there’s a liability portion liability portion is as an owner or operator; you have a responsibility to keep a safe environment. So let’s say if one of your just give you examples that I’ve dealt with one of my clients before, before you became my client, actually, he had a he had one of his tenants had a dog that bite another of some I think it was a visitor to another units.

I think they were having a birthday party or whatever it was he was a visitor he showed up there, this unit and this tenants dog bite this fellow be, it should have been covered under his renter’s Insurance. But that’s a separate question for a little bit. But the bottom line is that as the owner operator of that policy of that property, it’s your responsibility to make sure that if you allow dogs, don’t allow dogs, dangerous dogs, whatever your policy is, but to keep a safe environment. So that you know his Insurance company, when he was sued, the entity was sued, and therefore his insurance company, you know, kicked in and settled that lawsuit.

Another example is slip and fall, if you have you know, a maintenance company or a cleaning company, General company, they come in and they mop the floor, they leave the floor wet is not proper signage, somebody comes and slips and hurts themselves, you as the operator are liable, and they will bring suit against you. And that’s where your liability policy comes in to help with those claims.

In the in the liability side of things, there’s what’s known as umbrella or excess liability. And just to explain what that is a little bit just so you have a better idea of a standard liability policy, the coverage is 1 million per occurrence 2 million the aggregate what that means and in simple English is that per any occurrence, let’s speak about the slip and fall if someone were to slip and fall, and he was just to sustain terrible, terrible, you know, life altering injuries and they bring suit a suit of $3 million, your Insurance company is only responsible to cover $1 million of that suit. So, the extra $2 million is the entity the operating entity is responsible and if they’re awarded, obviously, would be the operating entities obligation to fulfill. So, it’s and then that’s 1 million in that that’s per occurrence, in the aggregate means in the annual policy, they’re only going to pay out $2 million. So, if you have one occurrence, that was a million dollars, and then second occurrence, that was a million dollars. And then you were to have a third occurrence of whatever it was the, your policy, their policy limits have now been exhausted, and now the policy will not pay out anymore. So that’s why many lenders and many prudent owner operators, but we’d like to buy what’s referred to again as excess liability or umbrella. And what that does is it adds another layer of liability coverage means so you have the 1 million from your general liability policy. And then you can have been we have some built, you know, some buildings that go that they have $100 million.

Meaning on top of that there’s layers, you can build an extra liability. So, if we refer back to the case, you know, the theoretical case of giving before somebody slips and falls and they’re awarded $3 million, if you were to have say $5 million of excess liability.

So, the first million would be paid out by the general liability policy and then the rest which in this case is 2 million would be shifted to the excess liability carrier and they would pay that out. So it’s is smart to carry some sort of excess liability again, a lot depends on the property value, if you have a very valuable building and someone were to slip, and you only have a million dollars of coverage, what happens is, is that there can be a lien on the building for the extra amount of money. So, you don’t want to lose your if you have a $3 million building or you have a $2 million building. And then there’s you don’t have proper Insurance; you could lose the entire asset because of a lawsuit that’s brought against you. So, it’s really, it’s a business decision. Some people don’t care. You know, they say, what’s the chances, other people, what I find is that when you’re dealing with syndicators, that people are dealing with other people’s money, they need to be more careful. So therefore, they asked for a little bit more Insurance coverage on the liability side, is that, is that clear?

[00:15:44]

Speaker: Aileen

So how do you determine if you have enough coverage, sufficient coverage in the excess liability side?

[00:15:52]

Speaker: Isaac

Again, it would make if complicated, but if again, it’s case by case basis, but let’s I’ll just give you an example just to illustrate the point. You have, you have a I don’t know an 80 unit, multifamily, you know, location, let’s say the value is $5 million dollars, on a piece of real estate.

So, what I would suggest is have at least that amount of coverage, meaning you don’t want it because if a suit is brought against you, or several suits are brought against you and you don’t have the proper coverage, they’re gonna come after the asset. Right? And that’s assuming that that excuse me, at that entity is a single purpose entity, meaning you have a an LLC or a corporation, whatever it is, that’s only owns that building, and therefore any suit that will be brought against it would be brought particularly against that building, if and that’s one of the reasons why people use the single purpose LLC is when it comes to real estate.

If, for whatever reason, under this same LLC, you own several properties, and now you’re built now between all those properties, your value is $10 million, or $15 million, then you would consider to get then you would be smart to consider to get higher liability, excess liability limits, because once they’re finished with this building, they’ll go on to the next until they’re able to collect whatever it was they were awarded. So what you’re the goal is, is to take stock of the value that this entity owns, and to make sure that you have at least that much coverage, again, it’s not a must Some people say what are the chances, you know, if it’s a $10 million, or whatever, it is a $5 million location? What’s the chances that I’m going to have a million dollars in lawsuits, that’s a gamble that either a business decision or gamble that you make that, I’m not going to sit out of.

[00:17:35]

Speaker: Seyla

So, let’s just say we’re evaluating a property, like you mentioned earlier, you know, 80 units, and then we’re doing a walkthrough, what are some of the things that we should look at, looking at the structure of the building itself that consider to in order to understand the risk of the property?

[00:17:53]

Speaker: Isaac

Okay, that’s, that’s actually a great question that people don’t, that people don’t think of, but it can, things can change.

First of all, the general shape of the building, every time you purchase a building, and you go with a new Insurance carrier, they’re going to send an inspector down to look at, you know, to look what’s going on. So if you’re in a city, or if you have, or you have frontage with sidewalks or whatever the situation is, you know, have walkways, make sure that those walkways are good we are, you know, in good condition, concrete, especially, you know, more urban areas, cities could be quite expensive. So they’re really, really broken off the Insurance carrier, what’s going on, but the insurance carrier is going to do is they’ll buy the policy, they’ll send an inspector out, and they’ll send what’s called recommendations afterwards policy recommendations, which are essentially the Insurance company’s way of protecting themselves that they see things that can cause potential harm.

So, on the liability and broken sidewalk is a very is understandably an understandable liability for trip and fall. And with serious repercussions people it’s outside it’s concrete. So that’s something to look at always looking look at the sidewalks and again is it make it or break it for the deal, that’s something that you know, you as an investor have to figure out but if the sidewalk is broken up really, really bad. And it’s more of a suburban area where you have the you have the multiple buildings, you have, you know, four six units and each of these buildings that is spread apart is a large amount of walkways and what was our really, really poor condition, then it becomes something a serious consideration because the insurance company is going to make you repair those and those repairs can be quite costly. So that is something to consider.

The other thing to consider that I’ve seen a lot of carriers take into consideration now is the roof age and condition. And again, that’s on the front more of a property consideration. A poor roof can lead to leaks, can lead to severe either wind damage, or water damage. So just to again, I’m not a roofer, I wouldn’t know. But if you have a building inspector, you have somebody that’s walking through the property with you or if you look at the roof and doesn’t look great maybe you get a second opinion, maybe figure out what’s going on.

Another thing is, is the electric, at certain points in some points in our nation’s great history, copper was the commodity. So copper wiring is preferred, aluminum wiring is not preferred and but at certain, certain times copper was scarce, they use aluminum wiring, aluminum wiring is much is much more dangerous at the cause fire because is damaged. So many, many carriers will not even consider a building with aluminum wiring, there are certain types of breakers that are federal passivity, certain types of breakers that the, the carriers don’t like as well. But the general rule is to make sure that building is a up to you know, local building code, but that it looks it looks outdated that things are not old and in bad condition, the pipes are, you know, pipes are old and rusty, then, you know, even if the insurance company will make a recommendation, you know that there’s a lot, something’s going to come up. You know, pretty soon we have old rusty pipes, they burst they break. So just common sense, is what I would say, for the rest of you know what to look for.

[00:21:09]

Speaker: Seyla

So, when an inspector arrives at the building, they inspected the property and they gave their recommendations. Is there any certain recommendations or criteria that you actually look at and say, no, we’re not taking this building?

[00:21:24]

Speaker: Isaac  

Who are those coming in?

[00:21:26]

Speaker: Seyla

Are the inspector come in, and they provided a recommendation to your company to review? And is there any criteria in the inspection report that you look at and say, you know, what, we are not going to cover this building? We’re not going to go ahead and take this on multifamily.

[00:21:42]

Speaker: Isaac

Yes. So, so just to be clear, the inspection is after is after the policy is bound. Meaning they, they bind the policy, then they send out the inspectors. So, there are carriers who do pre inspections, but that’s more on long and really, really large assets. Like we, we we’re with brokers on a number of big bills, large, very large buildings in New York City, there’s there are carriers who will send out they’ll do pre inspection, especially if it’s newer construction. But the rule of thumb is they’ll usually send the inspector afterwards. And yes, there are certain things that they’ll say, usually it’s not that way if you’re dealing with a good broker because the underwriter will know in advance, you know, any issues. But if they do arrive on scene and see that there’s something there, that just doesn’t make sense, they will, you know, give you by law, there’s a certain amount of time that they’re required to give you that they’ll say we’re, no we’re canceling, we’re getting off this policy, we’re getting this property because of ABC.

But the recommendations, that are given are usually given in different tiers is recommended. There’s, which are ones that they recommend, but are not required is required, that if you don’t let them follow up, you know, they’ll give you 30 days or 45 days, whatever it is to appear, and then they’ll follow up. If they’re not, there’s no proof of, you know, the recommendations that are in compliance, then they will again, you know, send out a notice of cancellation. But when they come to the recommendations, a lot of the times they, they’ll give recommendations like making sure that fire extinguishers are inspected, you know, these actions are up to date small things that are I mean, they do cost that are free, but they’re but not nothing, no major considerations. Again, like the sidewalks the things I suppose the roof, those things can be made. Sometimes, you also see like the siding or the things that are offered or not, not secured properly to the building. They’ll make suggestions, but usually not terrible.

[00:23:30]

Speaker: Aileen

Are there any other questions that you’ve heard other people have asked when they’re looking and shopping around for Insurance that that people typically don’t think of as well?

[00:23:40]

Speaker: Isaac

That’s a good question. Interesting question. Not much that I can think of I mean, it’s pretty, it’s pretty straightforward for me, you know, from the buyers.

[00:23:50]

Speaker: Seyla

So, I want to talk about a little bit about deduction, any recommendation in terms of deduction and making sure that we get appropriate Insurance?

[00:24:00]

Speaker: Isaac

Deduction? You mean deductible?

[00:24:02]

Speaker: Seyla

Deductible.

[00:24:03]

Speaker: Isaac

Okay, on the property? Yeah. So yeah, no, I would be happy have to discuss that. And one other thing I do want I do want to discuss just when you’re talking about property, is to make sure that the building is properly that the replacement cost on your policy is accurate, and we can sell before that’s usually determined by the lender, which means the lender is going to send out an appraisal, they’ll give you a number that they that, which is their minimum.

What I’ve seen, and especially in I don’t know why this is, but what I’ve seen at times is that these, the appraisal, whatever, whatever, whoever is giving doing the appraisal, the number that will come back is unreal, unrealistically low. Meaning that if they they’ll value the building at $2.5 million. And then just if you do the math per square foot, there’s no way you can build that but rebuild that building and in today’s times, we you know, at that price, so it’s if something were to happen and the entire bill, I had this, now we could come up with a client who was looking into purchasing something. It was a multifamily complex; it was like six or eight units. It was I think 340 units spread on the spread amongst, it was 42 and 43 buildings and one and a half of those buildings were damaged in a fire, meaning one building was a total loss, another building was severely damaged. And what happened was the seller had, you know, coverage that was required by his lender. But the amount of cars that they had was, let’s say it was $800,000 was not enough per building was not enough to rebuild the building, you know, to rebuild that building would have cost them more like, you know, 1.2 /$1.3 million. And they were it was it, they were in a very bad situation, because they couldn’t sell they couldn’t sell the property as a 300, you know, whatever it was 340 units and 42 building property when, you know, you’re missing one, one and a half of the buildings. And they couldn’t guarantee that the Insurance would pay out to rebuild, I believe, because they just didn’t carry the right number, the right value.

So, it’s something to consider, again, it’s hard. The best thing to do in that case is if you’re friendly with someone or you know somebody in the region who’s a builder in construction, ask them for a realistic price per square foot to build what it is, you know, if it’s super luxury, obviously more if it’s more, you know, Class B or C, it’s going to be less, but to get an accurate picture of what’s going on, because it could be really good to be stuck in a really bad situation in the event of a loss.

Then when it comes to deductible. So, to answer your question, there is again, that’s, that’s a business decision on the operators end. So, I usually leave it up to them, some people, like some people take high deductibles 20, again, it also depends on the value of the asset, me we insure buildings that are worth again, and you’re not insurance Brokers on buildings that are worth, you know, millions, hundreds of millions of dollars. On those buildings, the property deductible are usually either 25 or $50,000, which are much higher on a smaller building, you know, million dollar $1.2 million buildings, then you go down to you know, some people like 2500, some people like 5000, so like 10,000.

So, it depends, it really depends on you, and you know, the building better than I’ll ever knows the building. So if you think that the building, or you have a sneaking suspicion that the building is going to be prone to some sort of loss, you’re not going to want to have a high deductible, because you don’t want to constantly paying down if the building is in great condition, and you don’t see, you know, recently built a recently renovated and you don’t imagine, you know, we never imagined a bad things happening. But you know, there’s no, there’s no for there’s nothing happening in the foreseeable future, then you might want to go with a higher deductible, because that can bring down that you know, the premium and sometimes, you know, with bring a nice deduction to the premium.

So, it’s something to consider, again, knowing the asset and knowing what the expectations of the performance of the asset is definitely plays a role into that decision.

[00:28:04]

Speaker: Seyla

So, I want to ask about the claims part, is there any limitations in terms of a number of claims that an operator can submit per year? or at a time period to in order not to be dropped off the Insurance coverage?

[00:28:19]

Speaker: Isaac

That’s hard to do. There are two things that insurance companies look for, well, let me just waste a draft, almost, you’ll never almost never find an Insurance company dropping your mid-term for a property claim. It’s possible. But you know, if they think that there’s some sort of gross negligence, they think something you do you know, you’re a bad person or a bad operator, then they might be usually they want, what they can do is when it comes to the renewal, they’ll say there’s no way I’m touching this again. And, you know, I had I was trying to help somebody with that a couple of months ago, but so it’s always best that this goes really back to your question about deductible. If there are small repairs or something small, again, you have insurance that you know, they are required to pay, if you want to go through the claims process, you know, go for it. But if there’s a high number of claims, even if they’re small, it starts making, you know, starts making the insurance company nervous about the particular building and at the end of the day, you have to consider that they look at the profit profitability of the account.

So, if they’re, you know, if you’re paying, I don’t know $15,000 for your insurance policy, and you make claims throughout the year for $20,000 they’re gonna say I lost money on this account, I’m not you know, I’m staying away from it.

And then and something to consider that is even if they go away from it, it becomes much harder to place once you have either one very large claim just to go backwards before they look at two things either one very large claim and they’ll want to know why that happened. If there’s a good sometimes for very, you know, referred sometimes as like a shock claim, if it’s, you know, freak of nature or some something happens. That’s, you know, completely out of the ordinary unexpected, you can find carriers who will say Okay, I understand that we’ll take it on if there’s, if there’s a constant stream, even if they’re small claims, it’s especially what I find with buildings are, let’s say they have a lot of water claims. So it’s hard data, it’s the carrier looks at it, or the other eye looks at it and saying, hmm, you know, something’s there’s something wrong with this building, that there’s seven or eight water plans within a 12 month process, something’s wrong, there’s no, there’s no way I’m gonna, you know, I’m going to call this process. So, if you can minimize the amount again, and you have the Insurance is there, if you want to use it, use it.

But if it just doesn’t make sense, if it’s, you know, a bunch of small things, it’s some, even if it’s above the document, let’s say you have a $5,000 deductible. And then there’s an something to consider. Also, if you have a $5,000/$6,000 worth of damage. So, you’re going to put that through Insurance, you’re only going to get back $1,000 from your Insurance. But again, that puts a claim, you know, that puts a claim on your policy, if you constantly doing that, that’s a lot of claims, you’re not even getting paid that much. And you’re risking you’re risking your renewal and risking being able to be insurable. Going further. So, something to consider I’m not advising, not to put claims through insurance, because that’s why it’s there. But you have to, you know, be smart about it, I guess.

[00:31:07]

Speaker: Seyla

Yep. That makes sense. I mean, it comes down to the operator and making sure that does it make sense or not to file a claim and have that history on your record, but at the same time, you know, like, I want to ask you another question.

So, in terms of claims, let’s say we’re looking at properties, and that has five claims last year alone.  And will that history of claims, like follow the property or follow the actual owner?

[00:31:31]

Speaker: Isaac

Okay, that’s – you’re good. That’s a great, great question. And the reason why it’s a good question is because that actually changed recently, the way it used to be is that the Insurance company only cared about the operator. And they assume that if something, not only but they put a lot of confidence, or lack of confidence in the operator, so if you’re a proven operator, and even though, you know, your new purchase, they would say, Okay, how many years experiences you have, you know, they get a feel for the operator, and they would say, Okay, great.

More recently, what we’ve seen is, is the carrier’s asking for the loss from the seller loss rates, which means the loss history of the sellers, which means they’re now focusing more on the property, rather than on the operator. So, we’ve seen the market change a little bit when it comes to that. And it’s, it’s really been complicated for many reasons.

First of all, because you have these properties that, you know, we’re not performing well in the past, and that makes it more difficult for new purchases, but also on a more of a technical level, getting a hold of those last, you know, last history are referred to in the insurance industry as loss runs from the seller has, sometimes it’s really, really difficult because you’re not dealing with salad directly with a broker. And, you know, they, and especially if it was, didn’t perform well, they don’t want to show everything.

So, it makes things a little bit more complicated. But again, like everything in business, it’s a lot of everything is based on trust. If you’re dealing with somebody who you trust, who’s capable, they’re usually able to get that for you.

[00:33:01]

Speaker: Seyla

Thank you for answering all my questions. I have a couple more questions that are closing questions. Are you ready?

[00:33:06]

Speaker: Isaac

Go, shoot.

[00:33:07]

Speaker: Seyla

How has being a part in real estate investing impacted your life so far?

[00:33:13]

Speaker: Isaac

I would say the most the most fascinating and most enjoyable part is that I get to meet new people all over the place. That’s that that has been the, the best part of it. I would say, I enjoyed meeting people so that I really liked that part of it, the people and I come into contact people who I want to necessarily interacted with in my day to day people, like you or people from across the country or different parts of the country that I never been to and definitely don’t visit on a frequent basis. And that I would say that would be the best part for me.

[00:33:43]

Speaker: Seyla

What is one thing that you know now about real estate that you wish you knew when you first started?

[00:33:49]

Speaker: Isaac

That’s, that’s a good question.

I can’t pinpoint one thing. There’s a lot I mean, before I was involved, I didn’t know anything. Now, now I know a lot. I would say from an insurance perspective, let’s say that way, is how much location makes a difference in underwriting, I’ll say, I’ll say that way. The location of a specific property, when it comes is could vastly change from one location to the next.

[00:34:15]

Speaker: Seyla

From your opinion, if you have to give one advice to an operator who wanted to start up in this real estate business, what sets the successful people apart?

[00:34:25]

Speaker: Isaac

Successful people, I would say a couple of things.

One thing is hard work meaning and hard work translates into a lot of different ways it could be don’t get discouraged, keep on working. Even if things don’t seem like they’re working out, keep on working, you’ll find a deal you’ll know things. If you work hard enough and you’re persistent enough you will get to you know to where you want to get. That that’s one piece of advice.

And surround yourself or find a mentor surround people you find people you trust and you can ask for advice or unbiased that’s also something. That’s very, very key.

[00:34:59]

Speaker: Seyla

Got it. What tools or techniques have you used to improve the efficiency of your business or personal life?

[00:35:07]

Speaker: Isaac

Wow, getting personal.

I use an app called a to-do-list. I don’t know if you’re familiar with it, a friend of mine suggested, I use it just to keep track of this, you have a lot going on, I have, you know, prospects, I have existing clients just to make order of, you know, what I have to do, it’s like sort of like a to do list, I have it on my phone, I have it up on my computer screen throughout the day, just to keep me in check. And the fun thing about it is it has like a counter of like, how productive you’re being. So, it has like a number, like as you click off more tasks, that number goes up, and for some odd reason that makes you feel better.

[00:35:45]

Speaker: Aileen

And Isaac, if our listeners wanted to find out more about you, and what you do, and how would they be able to contact you and where can they go?

[00:35:52]

Speaker: Isaac

Okay, the easiest is probably LinkedIn, Isaac Schwadel, is my name. I’m there as in S-c-h-w-a-d-e-l. And then you can reach me via email, my email addresses; i then my last name is Schwadel at eallsure.com (ischwadel@eallsure.com). So, it’s the letter eallsure.com

That will, those are the probably the best ways to reach out to me. And if anyone has any questions, feel free. Feel free to reach out. We’re happy to answer any questions that people have.

[00:36:28]

Speaker: Aileen

Awesome. Thank you so much. I really enjoyed having you on today.

[00:36:30]

Speaker: Isaac

My pleasure. Thank you, guys, for being such a gracious host.